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Alimony & Taxes

Alimony affected taxes in the past. Alimony has been a deduction from income when the payor files his/her income tax return. If the payor earned $100,000 in a year and paid $1,000 a month in alimony, his/her taxable income would be $88,000. The $12,000 per year alimony would be added to the recipient's income and he/she would pay taxes on the alimony received.

With the new 2017 Tax Cut and Jobs Act, alimony is no longer going to be deductible to the payor or income to the recipient if the Final Judgment of Divorce is not entered on or before December 31, 2018. The new law provides that any divorce or separation instrument defined in section 71(b)(2) must be effective as of December 31, 2018. Since no regulations have been promulgated yet, the safest position is to have the divorce final judgment entered before the trigger date. Section 71(b)(2) does indicate that a written separation agreement may be sufficient. However, without new regulations, the safest bet is to enter the final judgment before December 31, 2018.

If you expect to be paying alimony when you are divorced, you should file your divorce in RI as soon as possible, since there is a 91-day waiting period to enter the final judgment after the signing of the divorce hearing (when most marital settlement agreements are signed).

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Law Office of Steven J. Hirsch, Esq

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